Wednesday, February 24, 2010

If the so-called expert economists are this far off, who can we rely on for reliable estimates?

Hmmmm, Economists estimated that sales of new single family homes would rise 3.8% in January. But, sales did not rise, they declined. And, at -11.2%, the decline was significant. So much for our so-called expert economists. (Where is my crystal ball?; I think I should loan it out.)

As reported in the Wall Street Journal today (February 24, 2010)......

U.S. New-Home Sales Drop 11.2%

WASHINGTON—U.S. new-home sales unexpectedly fell in January, setting a record low and erasing all gains made in the market during the past year as the economy recovers from recession.

Demand for single-family homes fell 11.2% from the previous month to a seasonally adjusted annual rate of 309,000, the Commerce Department said Wednesday.

Economists surveyed by Dow Jones Newswires had estimated sales would rise 3.8%, to 355,000.

It was the third drop in a row. Sales in December fell 3.9%, revised from an originally reported 7.6% decline. The new-home sales report is volatile because it is based on a particularly small sample. The government said it was 90% confident that the true change in new-home sales in January was between minus 25.2% and plus 2.8%.

The 11.2% decrease carried sales to their lowest level since records began in 1963. Sales fell below the level of 329,000 in January 2009 that analysts had considered the bottom for the market. Over the past year, sales had climbed, albeit slowly and unevenly, because of low prices, low mortgage rates, and tax incentives. But Wednesday's report wiped out the advance and showed, year over year, sales were 6.1% down from January 2009.

While the report Wednesday was depressing for the housing sector and cast serious doubt about the housing recovery, the government last week released data containing promise for future demand. It reported single-family home construction permits inched higher in January after two solid gains. The third straight increase suggested builders might be stocking up on permits in anticipation of demand from the extension of the home buyer's tax credit. The $8,000 incentive for first-time buyers was renewed through April.

Wednesday's new-home sales data showed inventories picking up slightly. There were an estimated 234,000 homes for sale at the end of January, up from 233,000 in December. The months' supply at the current sales rate rose, to 9.1 from 8 in December.

The median price for a new home fell, year over year, in January by 2.4%, to $203,500 from $208,600 in January 2009.

Regionally, January new-home sales dropped 35.1% in the Northeast, 11.9% in the West, and 9.5% in the South. Sales rose 2.1% in the Midwest.

Tuesday, February 23, 2010

ARC Q4 2009 Results - hit both nails on the head !!!

Regarding the previous post .....

I just went to and saw that they, in a post on their site in late January, hit both nails right on the head. Amazing.

They estimated that ARC's Q42009 sales would come in at $111.7 million. And, that's what ARC's sales came in at.

They estimated that ARC's Q4 2009 EPS would come in at $.01 per share. And, that's what ARC's EPS came in at.

Congratulations, Brad! (But, I still don't think you are going to win your bet about the ABI Index getting over 50 in Q1 2010.)

ARC Q4 2009 results ... compared to my estimates

Okay, ARC released its Q4 2009 and Full Year 2009 results this afternoon (Feb 23, 2010.)

Let's see how my estimates compared to "reality" (even though reality is something I never claim to be aware of).

In the post I did in late January, I estimated that ARC's Q4 2009 Sales would come in at $113.0 million.
In the earnings release ARC published today (Feb 23rd), ARC's Q4 2009 actual Sales came in at $111.7 million.

In the post I did in late January, I estimated that ARC's EPS for Q4 2009 would come in at $.03 per share.
In the earnings release ARC published today (Feb 23rd), ARC's Q4 2009 actual EPS came in at $.01 per share.

Not bad for a complete amateur "guestimator", huh?

It's my understanding that most of the financial analysts who follow ARC, estimated that ARC's Q4 EPS would be a loss.
Well, surprise, surprise to them; ARC managed to earn a profit in Q4, as I suspected would be the case.

Overall comment: In spite of the most challenging year (2009) the U.S. reprographics industry has faced since the Great Depression, which pulled down ARC's sales 28.5% from 2008, ARC managed to earn a profit in 2009 (adjusted net income of $17.2 million, EPS $.38). That's unbelievable performance, considering the times.

Can you tell if this is good news or bad news or no news about Construction activity in the U.S.?

From Reed Construction Data
January’s Construction Starts Rise Led by Commercial Projects
February 22, 2010 - Jim Haughey

The value of construction starts increased 4% in January after a weak December in spite of continuing unseasonably poor construction weather. Starts were 25% higher than in the previous January. Job-site construction spending fell 10% since last January. Interpret the divergence this way. The sharp decline in starts in early 2009 cut starts below completions leading to the year-long fall in construction spending. Starts plunged nearly 50% from August 2008 to June 2009. Since then, starts have rebounded nearly 50% so the pipeline of work is again expanding and will lead to resumed increases in monthly construction spending in a few months, with progressively larger gains through 2011.

Residential, heavy and institutional building starts were all about the same in January as in December. The major change was a 47% jump in commercial building starts, which reversed a similar drop in the previous month. Hence, this is not a signal that the commercial starts trend has abruptly improved. Still, there is a hint that improvement is coming soon.

The credit access problems that have plagued developers for a year-and-a-half are changing. Since late 2008, loan denials have come with one or more of three reasons. Lender has no money to lend. Lender is reducing real estate loan exposure. Or lender does not think developer can earn enough on the completed building to repay the loan.

Compared to a year ago, the no-money-to-lend problem has lessened and will lessen more, but remains a serious restraint on construction. The withdrawal-from-real-estate lending problem has worsened and will worsen a little more into the spring. Bank examiners are forcing lenders to be more cautious in real estate lending. But emergency loans from the Federal Reserve Board will keep this problem from getting significantly worse.

Loan denials due to unacceptable cash flow projections are becoming less frequent with significant improvement ahead. A year ago, a speculative building would have been completed in a depressed market that was expected to get worse, sharply dropping asset values. Today, the same speculative building will be completed in a market that will be slightly more depressed but is on the upswing, with asset values expected to rise for three or more years.

Thursday, February 4, 2010

Updated news from the AIA's Chief Economist on U.S. Architecture firms

Here's the internet address of the most recent article (Jan 29, 2010) authored by Kermit Baker about (depressing) conditions in the U.S. Architecture industry: